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To curtail the pressure on the foreign reserves of the country, mainly driven by the COVID-19 pandemic, policymakers introduced import control measures in April 2020 and some of which are still ongoing. As such, there have been 45 extraordinary Gazettes to amend regulations of the Imports and Exports Control Act No. 1 of 1969, being published since April 2020. In this article, we would like to discuss a few business tips for the trade to consider adapting to these changing trade regulations.
It is evident that the overnight implementation of restrictions on imports and exports is detrimental to traders in International Trade. Commodity stocks Imports or exports mostly revolve around building proper supply chains, not only for immediate consumption. In order to build proper supply chains, it takes sometimes years of long planning and “one shipment could be just a single activity in the entire supply chain. In this context, it is important that the trading community looks at these challenges with innovative thinking.
This article analyzes a few important areas that are critical within the supply chain cycle.
When there is a sudden regulation change, it is important to immediately look at the order book in hand to find out whether the changes will impact the entire delivery schedule. If so, immediately share the regulation changes with the supply chain networks and keep your suppliers alerted about possible disruptions during the supply chain. Therefore, it is critical to start a conversation on the existing contracts and change the delivery patterns, mode of transport and payment methods as appropriate to minimize the impact.
If any of the supplies are in transit during a sudden regulatory change, evaluate the quantities, values and remaining lead times to arrive at the destination country. Take immediate steps either to hold shipments at origin/transit ports or evaluate the possibility of diverting to a different closer port in consultation with the shipping line until you clear the destination regulatory issues. In the worst-case scenario, start lobbying with a Bonafide case with authorities for clearance of cargo or take quick decisions to re-ship back to the origin supplier to avoid unnecessary demurrage charges. Remember, these situations may be highly complicated and therefore, will need expert advice when handling such situations.
This is not a short-term action, but nevertheless worth trying. However, the intention here is to operate on shorter lead/transit times to quickly have the goods in the destination country, so that you possibly can avoid any sudden import restrictions.
This could be more of a medium to long-term goal for your business teams to look at the product specifications, to explore the possibility of including alternative raw materials from different sources/countries. This action will heavily need research and development support using supplier networks. While this sounds like a long-term goal, it could be a low-hanging fruit, if done strategically.
This is another factor to consider, called “localizing”. But this would depend mainly on the type of raw materials that you need. As import restrictions are likely to be long-term for some items, it would be better to develop a few local suppliers who have the capability to maintain product quality with proper supplier contracts.
This may sound easy, but it is costly when implementing it as it largely ties up your working capital. Therefore, you must critically consider the stock holding periods and cost and its impact on your final product. It is purely a commercial decision that a business should take after looking at different scenarios.
This article brings you a handful of tips that the trade can use at any point in a company’s sourcing strategy, to adapt to the changing environment. Considering the above, it is critical that businesses build agile supply chains with multiple local and multi-origin sources.
This article is a part of the Business Tips for Trading Across Borders series — A collaborative effort of
The Ceylon Chamber of Commerce and United States Agency for International Development (UASID) Partnership for
Accelerating Results in Trade, National Expenditure and Revenue (PARTNER) Activity
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